Oludare Mayowa | LAGOS

Nigeria’s central bank said on Tuesday it will sell $100 million at a special wholesale spot and forwards auction to improve dollar liquidity in the foreign exchange market and curb pressure on the local currency.

The bank, in a notice to commercial lenders, said the dollar auction would be both for spot and forward settlements and would be settled within the next 60 days.

Africa’s biggest economy shrank by 1.5 percent in 2016 in its first annual recession in 25 years, hit by a shortage of hard currency and lower revenue from its dominant oil sector as world crude prices remained under pressure.

The central bank has been intervening on the official market to try to narrow the spread between the official interbank and black markets. It has sold around $4 billion since February, but analysts doubt that this pace can be sustained.

Nigeria’s foreign exchange reserves had dropped 0.87 percent to $30.49 billion by May 25 from a month ago.

The local currency was quoted at 380.33 per dollar at the investor window on Tuesday, according to the market regulator FMDQ OTC Securities Exchange.

It was quoted at 382 a dollar on the black market, while commercial lenders quoted the local currency at 305.85 per dollar on the interbank market.

(Reporting by Oludare Mayowa, editing by David Evans)